Report on John Wallace presents a cautionary message

January 20, 2016


After six months of investigative work, the long awaited report on past management practices and operations of the South San Luis Obispo County Sanitation District will be released and presented at the sanitation district board meeting Wednesday evening.

The report shows that the long time former sanitation district Administrator/Engineer John Wallace used that position to assign work to his own engineering company without competitive bidding in an obvious conflict of interest. Further, he assigned work that was formerly done by district employees as part of their normal job responsibilities to his own employees at considerable added cost.

Employees who brought up issues were threatened into silence or labeled as troublemakers.

The report shows that as a member of the board during some of those years, I identified the conflict of interest to the board and moved to bifurcate the administrator/engineer contract such that competitive bidding would ensue.

Also on the sanitation district board, former Arroyo Grande Mayor Tony Ferrara and former Grover Beach Councilman Bill Nicolls supported Wallace unquestioningly and voted not to change or even consider the situation.

I thought the conflict so egregious that I brought it to the attention of the former District Attorney, but was told a majority of the board would have to vote to have the situation reviewed, something that Ferrara and Nicolls would not support.  John Wallace

I also voted against assignment of work to the Wallace Group without competitive bids but was again outvoted by Ferrara and Nicolls. Even former District Legal Counsel Mike Seitz indicated to me that there was a potential liability issue because it couldn’t be determined whether “staff” were in fact employees of the sanitation district or the Wallace Group.

Unfortunately he did not bring this concern before the entire board nor did he bring up the obvious conflict of interest issues.

Believing that someone on the Arroyo Grande Council should know of the situation, I brought my concerns to former Councilman Joe Costello, but never heard that anything was ever brought forward.

I was also asked to testify before the San Luis Obispo County Grand Jury, and their comprehensive report confirmed a number of problems at the district.  The Grand Jury report was denigrated out of hand by Mayor Ferrara and most of the Arroyo Grande Council at the time including Ferrara appointee Caren Ray.

After I left the board, Oceano Community Services District representative Lori Angello also voted unsuccessfully against assignment of work to the Wallace Group. Subsequently former Grover Beach Mayor Debbie Peterson came on the board and took up the issues.

Eventually Wallace resigned.

The report presents a cautionary message to the sanitation district board specifically, and other councils and boards in general, about the need for thoughtful review of contract relationships and work assignments, and thorough review by truly independent auditors.  It should also underscore the need for citizen involvement and media coverage of issues in agencies that otherwise receive little to no attention.

Don’t miss local opinions, like CCN on Facebook.

Inline Feedbacks
View all comments

Any one or any thing associated with the name “Seitz” is corrupt & tainted. That is an accepted rule in SLO Co.


Please post the report on your website!

To learn more on Adam Hill, go to:

This situation is by far an isolated case. Time and time again people with questionable backgrounds and cloudy employment histories are hired into, sometimes large $$$,$$$, 6 figure public sector positions, or while in the position have questionable and even illegal activities but the norm is sweep it under the rug, allow the person to quietly retire or leave with a large payout surrounded by silence due to it being a “personnel issue” or an agreed will not sue clause, the only common thread is the one assured looser is the taxpayer who continues to foot the bill. Normally the responsible persons are allowed to escape with out any repercussions, lets hope this time is different. Let’s hope Mr. Dow is honest to people and either admits his office can not do the right thing and give this to the right agency or does not do his norm and bargain this done to watered down guilty pleas.

Wallace and his pals, especially Ferrara, are about as slimy as the stuff floating in the treatment ponds ….

Message to Dan Dow …… Stand up to your campaign promise to take on corruption in this county …… INVESTIGATE & PROSECUTE THEM !!!!

I wonder how many of Individuals who are upset by this type of corruption will be voting for Hillary Clinton in 2016. This is one grain of sand compared to the Clinton riviera.

I will vote for her. Enron, Halliburton, Bush and Oil and the Clinton’s are corrupt? Not even in the same league.

Raw sewage dumped in the ocean where children play: a man and a company profits!

Prosecute Wallace now and vote Hillary!

The employees of the Engineering Company may not have been City, Government employees, but the owner of the Company was. That’s where the conflict of interest is as well as not allowing city employees to proceed with work duties, but having an outside company do it.

Simple.. it’s the “Good ‘Ole Boys Club.

New Times has weighed in with its coverage of the John Wallace/Knudsen Report story:

For those of you keeping score at home, we have the following media covering the story:



New Times

Who does that leave??????


Dan Dow?

KSBY has a story on the late news. It’s probably on their website now as well

I don’t think you’ve left out any media of any standing.

Tribune management is as dirty as Wallace and his cronies ….Why would they want to cover a story about the rate payers getting ripped off. For all we know Tribe could have been getting a cut of the action ……

Likely some form of “donation” has been effected over the years. John Wallace during last years election was flying a measure G sign at his office – The new increase in sales tax to fund SLO’s exorbitant coffers. He is obviously in with the government parasites which the Trib supports.

KSBY has it on their 11 o clock news last night and the cameras were rolling all night also!

Mr. Hill, can you please elaborate on your statements regarding competitive bidding because it sounds like you proposed to put the engineering services out to bid? According to California Government Code 4526, local agencies are NOT allowed to select an engineering firm based on competitive bidding. It must be a qualifications-based selection. The administrative aspects of running the District (paying bills, ordering supplies, processing time sheets, staffing meetings, preparing agendas and minutes, etc.) could have been put to bid, but not the engineering for doing any major improvements. That being said, reading Government Code 4526 further, it states that the procedures for selecting engineering firms shall “specifically prohibit government agency employees from participating in the selection process when those employees have a relationship with a person or business entity seeking a contract under this section.” I guess that is where the attorneys are arguing that Wallace Group employees weren’t government employees and were therefore not prohibited from being involved in selecting their own firm to do the work. Maybe they can avoid criminal penalties by arguing this fine legal line, but it certainly sounds like some ethical lines were crossed.

must be nice to bid a contract and approve the tax payer funded expenditure yourself

it’s the government way……

Lot of good information for a lay people or is it Wallace Enginerring and Associates. Nice try but he was hired for a specific function and ended up taking over the whole operation raping the taxpapers for services and payoffs Maybe you can retire to Palm Springs with Tony!